State Bank of India might soon start the process of integrating its remaining associates, beginning with two large ones.
After merging State Bank of Saurashtra, India's largest lender State Bank of India might soon start the process of integrating its remaining associates, beginning with two large ones -- State Bank of Patiala and State Bank of Hyderabad.
According to the roadmap set by State Bank, all its associates will merge with the parent entity "as quickly as possible" to make SBI one of the top 25-30 banks in the world.
With the return of the Congress-led UPA to power, without the crutches of the Left and other difficult allies, SBI expects banking reforms to move forward, a top SBI source said.
"The merger-process of State Bank of Saurashtra has already happened and the roadmap is to complete the consolidation process in the shortest possible period," the source said, adding that it could begin with State Bank of Patiala and State Bank of Hyderabad.
Once the new Government extends permission for mergers, the process could happen in the immediate future, the source said. "It will be more feasible now," the source said.
The Patiala and Hyderabad subsidiaries, which are wholly owned by the parent bank, had clocked impressive results in the last financial year. These two subsidiaries are quite large and SBH is now virtually of the size of Canara Bank.
While SBP reported a net profit of Rs 531.54 crore in 2008-09, against Rs 413.73 crore in 2007-08, SBH's net profit in the last fiscal stood at Rs 616 crore as compared to Rs 557 crore in the previous one.
SBP has a branch network of 750 branches while SBH has 1,014. SBI's associate banks have a combined branch strength of around 5,000 and a total business of around Rs 4 lakh crore.
The merger of all associates of State Bank with itself will take the combined entities' balance sheet to above Rs 8 lakh crore. This will help the Indian banking giant to join the league of global financial powerhouses.
In order to speed up the merger process, SBI appointed its former DMD, Bharti Rao, as adviser last year.
Bharti Rao is understood to have visited all associate banks to start work on the merger process, another source in the bank said.
"The SBI management had put the merger proposals on hold in the last few months only to wait till the new Government takes shape. Now, with a pro-reform Government set to take charge, SBI has plans to put the process (on the fast track)," the source said.
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